You are here

In re Marshall Spiegel

On a debtor’s objection to the claim of the issuing bank which holds a letter of credit to back the debtor’s appeal of litigation sanctions against, held: The debtor argues that the terms of the letter of credit should be strictly enforced against the issuing bank, while not challenging that the overall circumstances regarding the draw on the appellate bond had been met. As the debtor believes the bank’s honoring of the letter of credit was inappropriate, the debtor presumes that such strict enforcement results in the denial of the bank’s claim. The debtor, however, has failed at the most basic level to show how the letter of credit’s own language favors the debtor’s interpretation, which the court finds to be unreasonable. The letter of credit is not ambiguous, it is imprecise. Further, the debtor has failed to account for application of relevant Illinois statutes, the state whose law governs the letter of credit. Taken together with the terms of the letter of credit, that law permits the bank to honor letter of credit draws that appear valid, which is what the bank did here. Accordingly, even if the debtor were successful with its strict compliance argument, the debtor has failed to carry its burden to rebut the presumed allowance of the filed claim.  As a result, the objection to the claim is OVERRULED.

Friday, March 11, 2022